Coke’s debt-to-equity ratio has dropped, another sign of financial health. In Q3 2022, Coca-Cola had a debt-to-equity ratio of 2.78, down from 2.795 in 2021. FCF has increased, totaling $11.2 billion over the past 12 months, which has helped management strengthen its financials. The company now has $9.6 billion in cash and equivalents on the balance sheet, which gives it more flexibility.
- In July, 2012 Coca Cola issued a stock split, cutting its dividends in half and giving existing shareholders new shares on a 2-1 basis.
- Investors should focus on management’s ability to deliver this growth over the coming quarters and years.
- The EV/EBITDA ratio is a valuation multiple and is often used in addition, or as an alternative, to the P/E ratio.
- So be sure to compare it to its group when comparing stocks in different industries.
HThe Coca-Cola Company (KO) is a blue-chip stock with a long history of proven performance. It has been selling products in the U.S. since 1886, becoming the world’s largest non-alcoholic beverage company along the way. The stock itself has dramatically underperformed the S&P 500 index over the past decade. Not factoring in dividends, Coca-Cola is up roughly 70% to 210% for the index. As I mentioned, the company has gone through some changes over the past decade, shedding its bottling business and then dealing with the pandemic. The company’s dividend is arguably its most famous investment trait.
The company just gave investors a flood of new data about 2022 growth trends.
We may receive payment from our affiliates for featured placement of their products or services. We may also receive payment if you click on certain links posted on our site. Its last close price was $58.52, which is 2.67% down on its pre-crash value of $60.13 and 61.35% up on the lowest point reached during the March crash when the shares fell as low as $36.27.
At the time of this writing, the stock has dropped by almost 25% from its 52-week high. The well-known global brand innovates, and in recent times it has been more focused on diversifying its offerings. It grew organic sales by 6% in 2019, and net income per share by 9%.
Buying Funds: Issue a Buy Order for Funds That Hold KO Stock
At a glance, Coke might seem like the stronger growth stock right now. Organic revenue was up 11% in the most recent quarter while Walmart posted a 6% increase. By investing in funds that hold shares of Coca-Cola you can diversify your risk. You won’t have the full exposure that holding an individual stock does, although you also will dilute your potential gains if this stock does particularly well.
When comparing offers or services, verify relevant information with the institution or provider’s site. The Coca-Cola Company’s dividend payout ratio is perhaps best considered in relation to those of similar companies. The Coca-Cola Company’s most recent dividend payout was on 1 October 2023. The latest dividend was paid out to all shareholders who bought their shares by 13 September 2023 (the “ex-dividend date”).
Simply put, capital structure is a measurement used to determine how much debt and/or equity a business employs to finance its operations. Let’s look at elements of Coca-Cola’s capital structure, including its equity capitalization, debt capitalization, leveraging capacity, and enterprise value. Those documents provide insights into the company’s current performance, risks facing its business model and plans for future development. For example, Coca-Cola’s latest annual report details how growing concerns about obesity, sugary soft drinks and potential taxes on sodas could reduce the demand for its products. If you have a 401(k) or an individual retirement account (IRA), you might be able to buy and sell shares of Coca-Cola stock with your existing account. If you don’t have a retirement plan—or if you want to invest your money for non-retirement goals—you can open a new account with a broker.
Given Walmart’s plan to keep capital expenditures steady this year compared with last year, this spike suggests potentially large dividend increases in 2024 and beyond. That’s great news for income investors considering adding Walmart to their portfolios while aiming for a quickly growing payout. Still, Coke boasts the meatier dividend right now, with its yield passing 3% compared to Walmart’s 1.4% yield. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns.
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Consider adding Coke to your watch list — if not your portfolio — today. The Beverages industry is ranked #62 out of the 123 industries in industry analysis in strategic management the StockNews.com universe. Though the global economy is headed for a V-shaped recovery, the future of the beverage industry is uncertain.
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CocaCola Company (The) (KO) Is a Trending Stock: Facts to Know Before Betting on It
Shareholder Equity (which is the difference between Total Assets and Total Liabilities) can be found on the Balance Sheet. The Historical Cash Flow Growth is the longer-term (3-5 year annualized) growth rate of the cash flow change. Once again, cash flow is net income plus depreciation and other non-cash charges. Cash Flow per share ($/share) calculates the amount of incoming cash vs. the amount of outgoing cash for a company. It’s then divided by the number of shares outstanding to determine how much cash is generated per share. In contrast, the net income that goes into the earnings portion of the P/E ratio does not add these in, thus artificially reducing the income and skewing the P/E ratio.
Coca-Cola is a publicly traded company, and as such it is required to file financial statements and annual reports with the U.S. Cash flow trends worsened thanks to some growth initiative projects and payments related to some bottler acquisitions. But management still expects to generate nearly $10 billion of free cash flow this year, on par with 2022. Operating profit margin fell to 30.7% of sales from 32.5% of sales a year ago. But this slump was entirely driven by currency exchange swings, which are temporary.
Rivals such as Pepsico are expected to see earnings increases of 5.37% per year over the next five years. At around 22.9, Pepsico’s forward P/E is only slightly higher than that of Coca-Cola. Though the dividend yield of about 2.9% comes in slightly lower than Coca-Cola’s, the 47-year streak of payout hikes leaves its dividend under https://1investing.in/ the same kind of pressure for annual increases. Furthermore, even if Coca-Cola can maintain the streak, it may offer little more than dividend income to new investors. Coca-Cola stock trades at a forward price-to-earnings (P/E) ratio of around 22.6. This is slightly higher than the S&P 500 average P/E ratio of about 20.3.
These factors all indicate a business with an excellent market share position in an attractive global industry. Coca-Cola (KO 0.24%) investors haven’t had a lot to celebrate lately. Their stock has completely sat out the 2023 market rally and is in negative territory through late August. Coke’s returns have trailed the S&P 500 over the past decade, even after accounting for dividend reinvestments. Coke’s organic sales rose 12% to kick off fiscal 2023, marking just a modest slowdown compared to the prior quarter’s 15% spike. Sales volumes were positive after falling in late 2022, even as Coke charged much higher average prices across its portfolio of still and sparking beverages.
Core beverage franchises like Coca-Cola performed well, and so did non-traditional brands like Smartwater, Powerade, and Topo Chico. The beverage giant recently announced first-quarter earnings results that showed strong growth through late March, even as consumers slowed their spending. There were some other hints of weakness in the report, including slowing sales volumes and a reduced profit margin. Regardless of Coca-Cola’s stock price performance, investors can be confident they’ll be rewarded quarterly via dividends. The stock price increase versus total returns over the past 10 years shows the important role dividends play. Coca-Cola continues to hold its status as a long-standing Dividend Aristocrat.
All together, these qualities make the company a solid investment choice for patient investors. Let’s dive into the world’s largest beverage company to see whether Coca-Cola is a buy, sell, or hold today. You don’t think of a company that’s been around for over 130 years as having the growth opportunities that Coca-Cola has, but the company is in a unique position.